When I was a child, a lad in our street threw a stone through the window of the first Bangladeshi family to move into our street. We were rounded up by the local vicar and taken around to the family, and they gave us biscuits and lemonade, and made friends with us. Other Bangladeshi families arrived over the next few years, but they didn’t get their windows smashed.

More recently, I did some community work on the Boundary estate, near Brick Lane. One of the issues was the relations between the new middle-class white residents and the existing Bangladeshi community. Leila’s cafe and shop, which sold organic food, had her windows smashed by the local Bangladeshi teenagers. Her response was to make friends with them, and these days they treat Leila with great respect, because they all want jobs in the cafe.Read the rest of this entry »

The stock market has historically been a good barometer of future economic activity. It tends to be 6 months ahead of other indicators, due to the fact that it represents the daily confidence of company bosses, either in their own investing, or in the conversations they have with institutional investors. However, the stock market has always been a poor tool for the policy maker, since it is so volatile that it is difficult to see the wood for the trees.

The FTSE100 recently broke through the 6,000 barrier. This may be volatility, but a comparison to the bond market may provide clarity. UK gilts have been unusually expensive in the last few years. So expensive that they yield less than inflation. This is partly a distortion caused by QE, but it is also indicative of capital preservation. Fear has governed the markets.

However, gilt prices have been falling recently, and the fall appears to correspond with the rise in the stock market. Are investors leaving safe-haven assets and returning to stocks? Are we witnessing the return of the Confidence Fairy?Read the rest of this entry »